Florida Officials, TracFone Push Back on Lifeline Cap
The FCC’s forthcoming rulemaking notice on the Lifeline/Link-Up funds would cap support -- and that’s already drawing resistance, industry and commission officials said. A group of Florida public officials wrote the commission this week, urging it to recognize that low-income support is “cyclical” and to focus on other ways of trimming the funds’ costs. TracFone Wireless “will oppose any capping of the fund,” said Greenberg Traurig telecom lawyer Mitchell Brecher, who represents that company. The agency will take up a rulemaking notice on the fund next week.
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The questions and considerations in the notice hew closely to recommendations made in November by the Federal-State Joint Board on Universal Service, FCC Wireline Bureau Chief Carol Mattey confirmed Thursday. The funds are “overdue” for reform and haven’t really been updated since the mid-1980s, Mattey said at an FCBA luncheon Thursday. Asked why the commission was tackling Lifeline/Link-Up while there were still petitions for eligible telecommunications carriers pending, Mattey said: “It makes sense to get the rulemaking going so that everyone’s operating on the rules the commission adopts.”
Florida state Sen. Chris Smith, state Reps. Janet Cruz and Esteban Bovo and Plantation Mayor Rae Carole Armstrong all wrote letters urging the commission away from capping the Lifeline/Link-Up funds. “Likewise, we are concerned by discussion by some commentators of a mandatory monthly service fee,” Smith and Armstrong wrote. “This would place an undue administrative burden on both carriers and consumers and would appear to discourage registration by eligible consumers. The best approach to curtailing fraud and abuse is establishment of an eligibility database.” Smith and Cruz are Democrats, Bovo is a Republican and Armstrong’s office is non-partisan.
Brecher doesn’t know if TracFone helped organize the public officials, he said, but he was sure some telco involved in Lifeline did so. Capping the fund wouldn’t be “good policy,” Brecher said. “If the purpose of the program is to provide assistance for low-income consumers to give them affordable access to the network, do you cut it off in October?”
Florida is one of several states where TracFone is an eligible telecommunications carrier for the Lifeline fund. The number of Lifeline households in Florida has exploded, FCC records show. There were some 165,000 Lifeline households in 2007. In 2009, there were more than 599,000 households. Each one is given a minimum of $8.12 for Lifeline, the records show. The overall fund is $1.3 billion, an FCC spokesman said. Florida is also ground zero for payphone companies, who say Lifeline support to wireless companies like TracFone is driving them out of business, especially in places like Florida. The payphone companies have asked for an emergency FCC subvention and a separate rulemaking on whether payphones ought to receive permanent Lifeline support (CD Dec 6 p6).
The rulemaking notice also asks questions about whether recipients should be allowed to use their subsidy to buy bundled services, such as cable and Internet, an FCC official and a telco lawyer said. Brecher said he was okay with that: “I don’t think the FCC should be in the business of telling poor people how to spend their money.”
Nexus Communications said “there should be no upfront out-of-pocket fees for participants or, at most, a nominal fee.” It’s “important to understand in this regard that fees as ‘low’ as $10 or $20 can be extremely significant to the head of a household with (for example) no job, multiple children to feed and clothe, etc,” Nexus said in an FCC filing. The commission ought to create a six-month pilot program in four different cities to provide broadband through “smart phones,” Nexus said. “The program would require the participation of broadband spectrum holders and ETCs with successful real-world experience marketing communications service to the target community, providing ongoing customer support to the community, etc.” Nexus is a Lifeline ETC.